Standard Deviation Simplified | ICT Concepts

Summary

In this video, the speaker delves into using standard deviation as an essential tool in trading, especially within the context of liquidity manipulation and market projections. The concept is explained through examples of both bullish and bearish scenarios, highlighting how to utilize standard deviation for setting take-profit levels, managing trades, and identifying key market reactions. With a focus on the 2 to 2.5 range as a critical zone for profit-taking or scaling, the speaker shares real trading experiences to demonstrate how this strategy enhances decision-making in both intraday and higher time frame trades.

Takeaways

• 😀 Standard deviation is a key concept in trading, used to predict price movements and identify liquidity draws.
• 😀 The script emphasizes using standard deviation in both bullish and bearish market conditions to project price targets.
• 😀 Standard deviation settings include values like -1, -2, -2.5, and 4, with the 2 to 2.5 range being particularly useful for predicting pullbacks and potential price reactions.
• 😀 The importance of waiting for a proper manipulation leg or setup before entering a trade is stressed to avoid false breakouts or fakeouts.
• 😀 When projecting price movement with standard deviation, it's essential to mark the recent high and low to set the range for future price targets.
• 😀 The 2 to 2.5 range often aligns with the nearest liquidity, which is crucial for managing positions and setting take-profit targets.
• 😀 The script offers an example where the price hits the 2 to 2.5 level, then retraces or experiences a pullback, reinforcing its predictive power.
• 😀 In bearish setups, it's necessary to wait for a manipulation leg after a liquidity sweep before making entry decisions.
• 😀 Standard deviation can be used as a tool for intraday trading, helping traders set realistic price targets even without specific liquidity draws.
• 😀 The script includes real-life trading examples from the NASDAQ market to demonstrate how standard deviation is applied to real trades.
• 😀 The video recommends using standard deviation to project price targets and take profits, ensuring that traders have a clear strategy for entering and exiting trades.

Q & A

What is the main focus of the video?

The main focus of the video is explaining how to use standard deviation in trading, specifically in relation to liquidity manipulation and how it can help predict price movements in both bullish and bearish markets.

What is standard deviation and how is it used in the context of the video?

In the context of the video, standard deviation is used as a tool to project potential price levels based on the manipulation leg. It helps in identifying where price is likely to hit, based on past price actions and liquidity sweeps.

What are the settings recommended for applying standard deviation on charts?

The recommended settings for applying standard deviation on charts are: Z = 1, Negative values of -1, -2, -2.5, and 4. The speaker also mentions that while others use -3 and 3.5, he personally prefers the set values he provided.

Why does the speaker emphasize not entering a trade immediately after a bullish move?

The speaker emphasizes waiting for confirmation after a bullish move to avoid being tricked by fakeouts, where the price might reverse after initial bullish movement due to further manipulation.

What is the '2 to 2.5 range' and why is it important?

The '2 to 2.5 range' is considered the sweet spot for price pullbacks after a manipulation leg. It represents the range where price is likely to retrace before continuing the move. It is key for managing positions and taking profit.

What should you do if no liquidity draw is present?

If there is no clear liquidity draw, you can still use the standard deviation levels, specifically focusing on the 2 to 2.5 range for profit-taking or scaling out positions, as it is still a likely area for price movement.

What does the speaker mean by 'change in state and delivery'?

A 'change in state and delivery' refers to a shift in market structure, such as a reversal in price movement or the confirmation of a trend change. This is crucial for entering trades after a manipulation leg, marking a valid entry point.

How does the standard deviation projection help in determining take profit levels?

The standard deviation projection helps determine take profit levels by identifying potential price points where price is likely to reverse or reach. For instance, the speaker uses the negative 1 level as break-even or initial take profit and the 2 to 2.5 level for scaling out or taking more profit.

Can standard deviation be used for both higher and lower time frames in trading?

Yes, the speaker mentions that standard deviation works effectively on both higher and lower time frames. The key is to identify proper liquidity draw and understand the market structure.

What is an SMT (Simultaneous Manipulation of Trend) and how does it play a role in the standard deviation strategy?

An SMT, or Simultaneous Manipulation of Trend, is when price manipulates both directions (bullish and bearish) within a short period. In the context of standard deviation, the SMT helps confirm the manipulation leg and marks the starting point for projecting the price's movement using standard deviation.